Great example. I delivered newspapers for a summer, and I realized that the cost of the newspaper was about the same as what I made for delivering it, as I got paid per subscriber. This doesn't factor in the fact that I was working for a third party company, whose goal was to made a profit on the operation.

So, it seemed the paper actually pays more just to get the paper delivered than the subscriber paid for it. Advertising pays for everything else.

(I'm curious how newsstands and other outlets work, but I'd have to guess that the papers/magazines are provided at very low cost as well, with most of the price on the sale going to the stand operator.)